France bond yields climb after Fitch downgrade

France’s 10-year government bond yield pushed further above 3.5%, its highest since early September, after Fitch Ratings cut the country’s sovereign credit rating to A+ from AA-, the lowest on record.

The agency cited political instability and mounting debt, underscoring fiscal concerns just as President Emmanuel Macron installs his fifth prime minister in two years.

The downgrade followed the resignation of former Prime Minister François Bayrou last week, after he failed to rally support for a program of tax hikes and spending cuts.

Bayrou had also floated an unpopular plan to eliminate two public holidays to save costs — a measure quickly abandoned by his successor. New Prime Minister Sébastien Lecornu must now steer budget talks under intense scrutiny.

He is tasked with presenting a draft of the 2026 budget to parliament by October 7, with a possible extension until October 13.

France’s deficit, the widest in the euro area, is projected at 5.4% of GDP this year.